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WEIGHTED COUNTRY PRODUCT DUMMY VARIABLE REGRESSIONS AND INDEX NUMBER FORMULAE
Author(s) -
Diewert Erwin
Publication year - 2005
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2005.00168.x
Subject(s) - commodity , econometrics , economics , index (typography) , regression , context (archaeology) , product (mathematics) , price index , regression analysis , value (mathematics) , hedonic index , mathematics , statistics , computer science , geography , geometry , archaeology , world wide web , market economy
The article considers a very simple type of hedonic regression model where the only characteristic of a commodity is the commodity itself. This regression model is known as the country product dummy method for calculating country price parities in the context of making international comparisons. The paper considers only the two country or two period case and introduces value or quantity weights into the regression. The resulting measures of overall price change between the two countries or time periods are compared to traditional bilateral index number formulae. It is shown how the Geary Khamis, Walsh and Törnqvist price indexes can be obtained as special cases of this framework.